Channel Sponsor - Turnaround

Bidding for patients could be the future's new normal

Written by Ellie Rizzo |
August 06, 2014

Though price transparency is becoming increasingly popular in healthcare, there is still plenty of uncharted territory where it concerns price comparison among providers. While it's possible for patients to request — and sometimes receive — pricing data from various institutions, Priceline-style medical-cost-comparison capabilities are still relatively undeveloped.

This is likely due to the reticence of many types of provider to offer up complete pricing data to potential patients/customers, if it is even possible to do so; insurance and other circumstances can make these types of list incalculable without extremely specific patient information.

Surgery centers, however, are taking advantage of their relative agility in pricing data to participate in healthcare price comparison opportunities that would have been unheard of just a few years ago. In addition to the gradual stream of surgery centers posting their prices in public places, some centers are using their public pricing data to bid on patients.

A recent article from Kaiser Health News and The Washington Post details the journey of a patient looking for affordable knee surgery. Using the online medical market-making tool, Medibid, the man was able to obtain surgery in another state at half the cheapest price he had been quoted from his local options. A Washington local, he received bids from surgeons in New York, California and Virginia, all hoping to receive his business.

Ralph Weber, founder of Medibid says about 120,000 patients have used the service — for which they are charged to seek bids on their care — since it was founded in 2010. "We introduce transparency and also competition. We are a disruptive innovation, a free-market alternative to Obamacare," said Mr. Weber to KHN and the Post. The service mostly caters to uninsured, those enrolled in faith-based plans or holders of high-deductible plans. It has nearly 6,000 bidders competing for these patients — physicians, surgery centers and a few hospitals, according to the report.

Surgeons and ASCs appreciate the service because control of their costs allows them to have comfortable profit margins on the cases, despite the market forces driving the cost down. The free-market capabilities of the bidding system mean buyer and seller can both get what they need from the surgery's price. The tool has attracted a range of providers, from free-market proponent, The Surgery Center of Oklahoma's founder Keith Smith in Oklahoma City, to single-physician practices looking to attract more business in innovative ways and not necessarily in their local markets, as narrowing networks threaten the viability of private practice.

While Medibid may not eliminate the problem of viability, it is the result of a larger phenomenon: the stubborn nature of variation in U.S. healthcare pricing. Variation will surely continue to spawn innovations like Medibid, and the uncertain movement toward price standardization seems to indicate an immediate future, at least, in which price-comparison tools and bidding are not such an outlandish solution for medical market-making among independent providers.